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Industry insiders who monitor the markets exacerbate many of the problems that led to the financial crisis.
Leaders of Trump's key financial regulators all have strong ties to Wall Street and are committed to reversing the regulations put in place since the financial crisis. Among them, the Treasury Secretary, Steve Mnuchin, who was hedge fund manager and partner at Goldman Sachs; SEC Chairman Jay Clayton, former partner at Sullivan & Cromwell, specializing in mergers and acquisitions; and the controller of the currency, Joseph Otting, who was vice-president of the American bank. Mr. Powell was managing director of Banker & # 39; s Trust when the bank was caught in a derivatives trading scandal and partnered with investment firm Carlyle Group.
Each administration includes members of this revolving door, but the Trump administration has a disproportionate number of senior regulators in the financial sector and Wall Street.
The current state of the US economy seems strong, with a low unemployment rate hovering around 4% and continued GDP growth above 4% for the fourth time in the last seven years. Indeed, the recovery he has achieved since the depths of the Great Recession has been nothing short of miraculous.
However, outsourcing is the loss of prudent regulatory and monetary policies of the last decade. If this continues, it opens the way for another financial crisis that will bring back the days of high inflation and high unemployment that have not been seen for more than 30 years.
Those who do not learn history are doomed to repeat it.
–By Victor Li, professor of economics at the Villanova School of Business
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